KUALA LUMPUR (June 6): Malaysia has decided to exempt job contracts signed before Jan 1, 2025 from stamp duty and will waive the penalty for late stamping.

Employment contracts signed beginning this year, meanwhile, are subjected to stamp duty, though the tax authority will waive the penalty for late stamping, on condition that they are stamped before the end of 2025, Inland Revenue Board (IRB) said in a statement.

However, the mandatory stamp duty and penalty will be enforced for job contracts signed next year onwards, the IRB said.

Under the Stamp Act 1949, formal employment contracts are subjected to stamp duty — regardless of whether they are for full-time or part-time, local or foreign staff — at a flat rate of RM10 per contract.

Contracts for those earning below RM300 per month are exempted from the rule, meaning that virtually every employment contract will be affected, given that Malaysia’s minimum wage is now RM1,700 per month.

While the law dates back more than seven decades, the IRB rarely enforces the mandate to stamp job contracts within 30 days of their signing, failure of which results in a penalty of RM100, or 20% of the duty, whichever is higher.

The partial reprieve announced on Friday took into account the “high number of employment contract documents involved,” the issue being a new audit finding, and the burden on employers, the IRB said.

The non-compliance with the stamp duty law was among the main findings of an audit carried out nationwide, following the planned implementation of self-assessment stamp duty system announced in Budget 2025.

The IRB also reminded that all employers are required to verify and update all existing and upcoming employment contracts, to ensure compliance with the Stamp Act.